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NATIONAL ECONOMIC MODEL(Prof.Dr.Haydar BAS
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GENCTURK....
  Uluslararasi Milli Ekonomi Modeli Kongresi '05 Kapanis Konusmasi /
With his historical background of 5000 years, with his Turkish and Islamic civilization of 1400 years, and with his experience due to Republic of 82 years, Turkish Republic and Turkish Nation, lives in a very important and historical region where the continents of Europe and Asia intersects.
Although he is in the centre of and even at the target of political, economical and social wars, Turkey stands due to its power coming from his religion, and is last hope of Turkish-Islamic world and of oppressed nations.
Since the born in history of humankind, Turkish Nation has given justice and human rights to people and taught the civilization and technology them, while he claimed his historical mission raising himself and his values.
21. Century is an age when the concept of national dominance and independency has changed. As a matter of fact, one of the ideologists of globalization, John Naisbitt presents his approach:
"We see that the big companies can work better by splitting into smaller and autonomous units. It is the same for countries as well. If we want to change the world to with one market, its pieces should be small.
Our nation ,who faced to being destroyed by a political, cultural and social activities which are executed quietly for ages, had won his dominance due to independence fight which was leaded by Mustafa Kemal Atatürk and had turned back to essence of Kuvvay-- Milliye and had been a model for nations which were fighting for their independence.
Atatürk was speaking in the opening ceremony of council, 1 March 1922: "We can not think about anything else different from reaching our national independence which is our aim. That is why the important thing is whether our economic power is enough to get this result or not.
...the sources of our country are enough to finalize our national claim safely and successfully. Although it has many lacks, our national power will manage the country without borrowing from foreign countries and will arrive to its aim like we have been succeeding until today."
Mustafa Kemal had emphasized on economics freedom for a complete sovereignty of the republic which was established new and he removed the concessions inheriting from Ottoman named Kapütülasyon. He tried to liven up the national economy by organizing Economics Congress in --zmir in 1923. He said that it was never given up the principle of national independence and that the national development would be succeeded in the boundaries of this principle.
That is to say there is a direct relation between sovereignty and economy which stands alone.
In the period of Atatürk's management, namely until 1938, in all fields plans and projects for development had been executed and many big successes had been achieved.
In this period, with the national model which was applied for development, our country had reached to a level that airplanes could have been exported to Belgium. But after Atatürk, Turkey had been again besieged politically, culturally, economically totally. West states were beginning to realize the SEVR which could have not been accepted by Mustafa Kemal, by AB and IMF.
Between the pincers like IMF and World Bank who directs the budget of our country, in a period which all the sources and facilities of our country were used, where privatization, the sale of public economic enterprises, the international fortification and restriction and harmony laws for European Union were put into practice, Turkey is being the sacrifice of a project where he was divided into small pieces.
We are living in a world where the economic freedom was starting to be accepted as huge determination for independence of states.
We are facing a period which the countries are going under the control of the global forces who lending loans to them which might be described as a cold war.
The troubles of our country lasting for a long time are becoming chronic. The unemployment and impropriety are increasing, the public associations relating to education, health and justice can not issued their functionalities unfortunately anymore. This removes the self trust of our nation and the enculturation activities destroys the national identity.
The number of Hopeless and faithless people reached to top. Our country is being crushed under the global political and economical policies.
Nowadays where the boundaries lost their importance by the means of economy, the ideology which the global forces are imposing to underdeveloped-developing countries is that the comprehension of national state is unnecessary anymore.
As a reflection of this comprehension, the 6th law of constitution namely "sovereignty belongs to nation himself unconditionally" which must be kept with mechanisms running in Turkey, is commented on again different form the principles Atatürk had remarked.
The folks losing the comprehension of national state are open and defenseless against to obvious or hidden treats. Loans which require heavy provisions, the political compensations which seem like national helps, the remove of all obstacles in front of foreign investors can be counted as a result of this comprehension. The result which is wanted to be achieved with these ways is to destroy the freedom. In these period of course there will not be anyone considering the welfare of the nation.
The industrialized and developed states, who want to command the world, use the sources of the underdeveloped and developing countries for the benefit of their exploitation.
Anyway the aim of the globalization is exploitation of the sources of the underdeveloped and developing countries by the global forces and is to take delivery of them in all fields.
We see that the stronger oppresses the weaker wildly according to rules which capitalist economies have authority on the world nowadays. At this point the welfare of the folks and the development of the countries became an utopia in the systems which transformed to exploitation of emperors.
After Second World War the financial help policies became popular among countries who efforts developing.
But the developing countries, whose development were depending on the investments of foreign investors, yield everything wanted by the countries of them.
As a way of that in the new world order, the less improved countries have been encouraged to implement their development projects depending on foreign debts since the end of Second World War. By the swamp of debt where they were pushed a lot of social and political demands have occurred snare
All the debts taken from foreign countries depend on circumstances. But the companies get the most part of their credits under the name of promotion.
While the government is trying to pay back its credits, international companies get the benefits from the investments they have done in the country.
Thus, as the government and the people of the nation are taking great financial responsibilities, the foreign companies get the profits.
The capital owners in the global economy are implementing the model of earning money from money rather than production. By this method, they get away from the production which depends on risky and difficult profit. These companies make their productions in the countries where labor and other inputs are cheaper because it is easier to get money from the financial markets of unimproved countries.
The name and address of exploitation is "the international companies" in the new world order. Today, the total assets of 300 international companies represent 25 percent of the production assets through the world. 500 big companies control the 65 percent of world's trade.
In Turkey there is hardly ever a holding which isn't held by an international company. While these companies supply the tiny parts of the money which is necessary for their foreign investments by using their own sources, they provide an important part of that capital, almost 85-90 percent, from the assets of the country where they import funds.
This example is a significant one to prove that the international companies in Turkey use the assets of the government and Turkish people for their advantage: in 1973 the companies which were active in Turkey had loans as much as 81 percent of their capital and they got 96 percent of that credit from local sources.
As a final point, the amount of money which overflows thorough the world, aiming to get money from money, has reached almost twenty times of world trade capacity. The speculative and destroying result of such a big amount of money is widely apparent.
That's why IMF offers some programs to the improving countries like Turkey
But the aim of the advised programs is no to stabilize our economy but to let the global finance groups capture our markets and resources. It is the reason for IMF to demand our most strategic and profitable institutions should be privatized. But the strong state is a obstacle in this process.
The only thing that the global funds want from the unimproved or improving countries is not to pay the money they owe as a response to World Bank and IMF credits. The credit given to us requires implementing heavy programs to devastate agriculture and animal farming, and to make the people starve.
These requests are set in front of Turkey. In the last decade Turkish farmers are in very bad conditions because of the limitations which are aiming to confine of planting some agricultural products like sugar and tobacco.
The Turkish farmers who come to a critical point who can not plant because of that the government quits supportive buying and ends the low interest rates practice and even they can't sell their products anymore. Products like sugar beet, tobacco, wheat, peach, fig, apricot etc. are left over farmers.
The same situation is with stockbreeding.
In Global Economics approach, privatization issue is an important condition for coming of the foreign capital to the country. The corporations which earn much are sold much lower than their real value.
ERDEM--R, PETK--M, POA--, TÜPRA--, SÜMERBANK, KÜMA--, ORUS, ET VE BALIK KURUMU, SEK, TOFA--, THY... are such corporations.
Especially it is remarked without abstaining that this privatization is under the control of World Bank not the Turkish Government.
Ufuk Söylemez, the chairman of the Privatization Board in 1995, said about the privatization of the part "T" of PTT: "Telecommunication services will be privatized under the control of World Bank according to international methods. We can not move out of the path that World Bank and Counselor Firm suggest.
U--ur Bayar, one of the chairmen of the Privatization Board says: "We have managed to follow the way that we promised whenever IMF came here. We said that there would have occurred those things in the first quarter and they occurred. We said that there would have occurred those things in the second quarter and they occurred again. In the third quarter they see that the process we have suggested for THY and ERDEM--R has started.
The prices, that were determined in the privatization which was executed with the impression from abroad and which was executed without any benefit of Turkish Nation, shows these corporations were sold like bargain. For example, POA-- was sold in March 3rd, 2000 with a price of 1 billion 260 million dollars.
The authorized people say that an association like POA-- can be built with 8 billion dollars. The purchaser had paid for ¾ of POA-- with the money which was in the cash register of POA--.
In 1998 the rights of operating cell phones were given to Turkcell and Telsim for 25 years. After the agreement whose price was 500 million dollars, those two firms paid these 500 million dollars in two years with the prices that was paid by phone customers as fixed fees.
Dismiss of thousands of employees while these privatizations is another suffering photo Turkey. The results of these global manipulations are here:
1- The income of our country due to taxes can not even meet the interests of our internal and external debts.
2- Our country is in a vicious circle like "high interest, foreign currency and debt"
3- Privatization of profitable national industrial or communicational institutions such as TELEKOM, PETK--M, and TÜPRA-- is realized against amounts very under their true values.
4-The national currency on current market circulation is less than required. Who objects that the compensation of this gap would be held by Central Bank, also aims to utilize bank cheques and so called "plastic monies", namely credit cards by making use of this financial handicap. These tools support interest system providing an additional income source to banks.
5- Government holds Treasury bids to get rid of some of the burden aroused from debts. In other words, inadequate coinage leads to improper flow of sources to banks and global financial groups which are deriving profit from money itself.
6- Since the government is unable to provide enough emission for the national market, Central Bank of US is compensating the emission gap and thereof a continuous increase of foreign currencies in circulation is observed.
All recent cabinets have had the IMF takes the lead in national economics of the country. The say "We will proceed with IMF" which was a very popular election slogan, now became one of the main reasons for poverty of Turkish people.
According to a research article issued by Los Angeles Time on Jan 4th, 98; 54% of the countries had a decrease in national economics, and another 36% had a collapsed economy where both parties were borrowed from IMF via concordance credits.
Another research held by World Bank in 1998 resulted that, Turkey is in the leading 25 within countries having worst income distribution among 133 candidates.
Turkey had greatest economical shrinkage in 1999 ever since Republic was formed.
In 1999, IMF stated some conditions for a new covenant based upon financial support to Turkey, such as performing some pseudo-reforms like issuing Bank Law and Social Security Law, International Arbitration, and Privatization.
Realization of these pseudo-reforms has resulted faster impoverishment of Turkish people where international companies and their local partners having enormous amounts of profit. New laws caused negative financial balance fort eh government and profitable governmental enterprises are being sold.
IMF was advising continuously for new taxes for citizens where they were making things easier for international companies
Officialization of International Arbitration application, which transfers the solution of disputes from Turkish judgment to "foreign judgment", makes the capitalist authority work upon countries.
57th Cabinet, which gets the arbitration to constitution, also officialized the reverse processing of arbitration with the law 4501.
The following case is a true story between Mexican people and an US company, sampling why international arbitration is a precondition before foreign financial support:
ETHYL CO, which was a US company, was ignorant for toxic waste mixing to potable city water. Reaction of citizens made the court handle the case, and as the Mexican government was accepted the International arbitration; International court was on stage.
The company won the case since local courts were assigned first; a condition which breaks the agreement.
In the year 2000, IMF had another condition for the financial support; called "Additional Letter of Intent", having items even more severe than items of Sevres Treaty.
These conditions, which were accepted by 57th cabinet include; privatization of Türk Telekom, THY (Turkish airways), Makine Kimya Endüstrisi (Mechanical Chemistry Industries), Tekel, and Sugar Plants; electrical market law, sugar law, TEAS law to be issued on time; cancellation of subventions in agriculture, increase in tax rates, decrease in cereal stocks; and 10% increase limit for civil servant salaries per year. Each of these was completed.
It is obvious that, IMF is something far beyond being just an institution which sells money. Loans are also compromising within political, social and economical aspects.
In fact, the government claiming the only way to exit is borrowing from IMF instead of some alternative methods to be declared later by us is maleficent to our nation and people.
The Picture discussed above with sub-headers, is the real situation in Turkey. The country has debts about 400 billion dollars in total, while IMF is leading the economics, production diminished very close to zero, agriculture and stock-breeding almost extinct, underground sources are sold to foreigners and all these items being completing parts of the puzzle showing the situation is far worse than War of Liberation.
Turkish people are the real smashed portion of this table losing their rights. Turkish citizens are wronged all because of this.
This is actually a system requirement in capitalist order to proceed; namely some minor portion has the profit.
Another system is a must if a person wishes not to face all these awkward.
As it is mentioned in the very beginning of this speech, maintenance of financial independence and conservation of national-government are two musts to keep independent country.
This is the only possibility which we can mention true wealth and people well.
This concept is almost unachievable in capitalist system.
It is not possible for a certain group having the financial powers to forfeit their ongoing domination with allowing another philosophy to reign against their own good.
So we have to form and put into practice our own model in order to give the rights to Turkish Nation and to all the people which are overpowered actually by the capitalist understanding
It is strongly inevitable to put into practice a model belongs to us, which will provide our great nation, -not the global forces- the welfare, abundance and richness status they desire,
Thus this economic model has occurred by this necessity
We see the examples that to which point our country has been taken by wrong economy policies.
In addition to all those, these following three important cases, which are very vital to world economies, couldn't be resolved during the Economy's history
1- a fairly wage distribution
2- reaching a constantly ongoing growth
3- to provide employment or to resolve the unemployment issue
National Economiy Model has been developed taking into consideration these three unresolved cases. Infact NEM brings solutions them.
That's why it is not an anti-thesis but an excellent theory for the solutions of the problems and people's welfare
Now let's consider our thesis with its main headings
This theory we have served to the economy literature is the answer of the question, as one of our Russian friends said "we have suffered socialism but the world is suffering capitalism, what is the model to rescue us and the world and to regulate the distribution of incomes, to provide the constant development and complete employment
This question was asked in the history of economy which is as old as human history, but it hasn't been answered yet
Each economy model is a result of a culture and a point of view. Capitalism is the result of approaches of western people to economy.
But the National Economy Model has been generated thanks to the values belong to us and the norms that the Muslim Turkish identity has.
With in this context National Economy Model is not an antithesis against the earlier implemented economy models, but entirely an original point of view with completely original rules. Our thesis is the only resolution to save and supply welfare to not only our country but also other people on the earth with this aspect . So each subject of NEM should be examined carefully.
Then What is National Economy Model (NEM)
National Economy Model is the science to cover the limited needs of people using the unlimited sources, and also it is the formula that the countries have got the power of producing every kind of goods and services, in addition to the ability of afford the domestic and foreign expenses without loans. National Economy Model is the only way for the development of the nations and countries, and for economic freedom in this sense.
Lets begin to assess our theory with new point of view we have brought to the subject of "needs and sources", which is the key problem of economy.
As we know, the aim of economy is human being. It is too difficult for an economic model to be successful unless it is formed from human's features and needs and even it may be impossible.
The failure of the today's economic models gives us an idea about this reality. All these models have initiated the case in a wrong way by identifying human as fitting their systems instead of describing human.
For example, the concept of "ECONOMIC HUMAN" is capitalism's model individual, which is aiming to enhance its own profits to the top levels and it is obvious that it can't provide the communities welfare except for a little minority.
The economic systems, which are formed by the point of view of west to humankind, have constructed the subject of economy on the misunderstanding that the needs of human are unlimited. According to them, despite the needs are unlimited, the resources which are necessary for them are limited.
In these systems which accept that needs are unlimited, the answers given to the questions "what ? Whose? How much? Will be produced?" occurred thanks to the resources which are really defined as scarce. Finally they could create some narrow models where only a definite part of the community get the desired welfare level, but the hunger and abject poverty of majority of the other peeople have taken part in economy as the problems which can never be solved, in another word the problems that cant be resolved since lack of enough resources
That's why sense of exploitation in capitalism is a valid way to reach the limited resources. The workers are seen as slaves because that reason. We can say that the Capitalism's approach to employee is Modern Slavery.
It is a fact that the west, who admit that the needs are unlimited but the sources are limited, hasn't been able to get a success which will provide the people desired welfare so far.
And how is the human factor approached is Model of National Economics?
According to our thesis, the claim that resources wouldn't be efficient for human needs is inaccurate. On the contrary thousands of "unlimited and renewable" resources exist, on earth and space, for very single need of the human beings.
When the concern is human beings, in case we mention some kind of unlimited ness it can only be his passions. Otherwise it is possible to count hundreds even thousands of resources to meet the needs of people like eating, drinking, heating, clothing, housing etc which are quite in complex and limited needs.
To give some examples of these unlimited resources which are evaluated only in our model, we can mention thousands of known and unknown but constantly renewing resources like energy systems (solar energy, nuclear energy, wind energy, geothermic energy, biomass energy, wave energy, flow energy, fuel cells ), agriculture, stock-breeding and its sub product forest products, sea products.
The deflation problem, Turkey as well as the western nations struggle, is another proof of the accurateness of our thesis suggesting that the need is limited where as the resources are not. This problem, occurring because of the insufficient demand, couldn't exist if there were a shortage of resources.
Since we mentioned about it, let's talk about the problem of deflation which can be fixed with the model of National Economics.
As can be known, deflation is the name given to permanent decrease in the general price level. Compared to inflation, this problem is more dangerous and today threats the economies of countries from all around the world, especially our country-Turkey.
The decrease in the general level of prices is caused by the inadequacy of aggregate demand. In this case, firms decide to reduce the production capacity and consult the way of dismissal. On the one hand, consumers with the hope of decrease in the prices reduce their existing demands, but on the other hand increasing unemployment pulls down the inadequate demand.
According to classic perspective of Capitalist understanding, the fault that prices and wages are elastic and system should be fixed by its own is accepted.
However, Keynesian approach which rejects the idea that markets should be balanced by their own advocates the idea of supporting the demand by increasing the expenditure. In this application, which works partly in consequence, the reason that money used for government expenditure is "costly money" leads to both inflation and the problem of debt in these countries as time elapses.
As a result of the loan taken by, governments are forced to increase tax rates and decrease both current and social expenditures.
In this situation either the costs of productions are increasing because of increasing tax rates or both the decrease in public expenses or absorbing the money from the markets due to high tax rates caused the decrease in demand of folks.
In these circumstances, on the one hand production costs increase as a result of increasing taxes. On the other hand, the condition that let public to reduce medium-dated expenses and withdrawal of money by taxes leads to a reduction in the household demand. As a result, world economies face a new disease consists of both unemployment and inflation, namely stagflation. The point that Capitalist understanding disregards is that the reason for deflation is the situation which people do not consume, this deficit is tried to met with public expenditures made by costly money.
At this point, before we go on to the solution of the problem, an issue has to be clarified. Why do developing economies go through a period of recession after sometime and can't achieve sustainable growth?
Another fundamental question addressed in NEM is; the assumption that "every supply creates its own demand" is totally incorrect. If you have a growing economy, it is not possible to achieve consumption to meet the supply with the income gained by that same production. In each period, it is essential to meet that deficit of consumption with an increase in emission.
In such countries, when a certain amount of annual growth is achieved, each year the deficiency in consumption also increases.
In a few years, this deficiency of demand becomes an impasse for the growing economies. We might visualize this phenomenon as the collapse of a human being whose body grows continuously as his bones stay the same and ultimately fail under the load.
In the beginning of 90's when we first mentioned these opinions, the world has not yet faced the deflation. In those years, we had also mentioned that the world economies would encounter a serious "market problem", and especially the fast growing economies would go through a period of deflation if necessary emission adjustments were not made.
As you might remember, during the mid 90's Japan was the first to go through a period of deflation. Even though the nominal interest rates were zero the real rates were kept positive. The Japanese households lost their power of purchase and their belief in the future, and decreased their spending even further. This caused the prices to go down and stocks to increase. Lay offs followed soon after. The Japanese economy has not yet recovered from the damage.
In addition the Japanese economy is in great trouble because of its US export-oriented nature and 800 billions of USD currency in its reserves.
On the other hand, in our speeches on TV in January 2003, we have forecasted that the German economy would be in regression shortly and unemployment would rise as a consequence. We also declared that Germany would suspend the Maastricht criteria and increase public spending and in short term would be forced to borrow foreign debts.
In a short period of time, all our assumptions started to became real. In the year 2003, the Germany economy went into regression. Then unemployment numbers started to grow. As per today, the Germany unemployment figures are the highest in last 72 years. The number of unemployed is more than 5 million. Germany borrowed 40 billion USD of foreign debt and started a discussion in EU for not meeting the Maastricht criteria.
It became evident that with these policies implemented, as we have mentioned before the EU is bound to disintegrate within the following 15 years.
Germany had a growing economy. After they switched from Mark to Euro, the currency need that has to be present in this growing market was not met by an increase in emission. This was because; the right to print money was taken from the Bundesbank in Berlin and granted to the European Central Bank in Frankfurt.
The only reason for the deflation emerging in economies is not the deficiency in demand. Sometimes the economies may go into recession even though there is a sufficient amount of flowing currency. The unbalanced distribution of wealth is also a fundamental cause of deflation.
If a certain group of the society gets a reduction of income, it might be deprived of the power to consume. Even though there is a surplus of currency in the market, it is not possible to end the recession in the economy unless that community regains its ability to consume. In other words the decrease in the interest rates and the increase in consumptions are not the solutions of this problem.
Already the US example proves what has been said. The FED had decreased the interest rates down to 1% aimed to end the recession but succeeded to a limited extent. This was because the American public had a hard time in their livelihood.
US also feared that the kar----l--ks--z dollar currency in the world would come home, so they couldn't keep on lowering the interest rates down to zero.
If we look at the Turkish example, it is not a different story. As the cost of production increases with high inputs, the demand shrinks because of the suction of money from the market by high interest rates. In such an economy the existing TEFE and TUFE calculations are incorrect.
If an economy has high amounts of cost induced inflation coupled with a serious decrease in demand then these calculation methods became incorrect. Let us assume that you are planting wheat. The price of wheat goes down 30% because of the decrease in demand. But if price of the fertilizer and oil consumed during wheat production increased by 35%, the inflation for the farmer is 65% not 2.5% as calculated by the existing methods.
In that respect, the solution for our country is, to implement a fiscal policy that lowers the production costs and a simultaneous monetary policy that triggers the production.
We also have a serious unbalance in the distribution of wealth. This is also an important cause of deflation.
In the dominating view in today's world, production is not favored against gaining money from money.
In the FEX markets, the daily turnover is 2 trillion dollar, whereas the annual trade turnover is 6.5 trillion dollar. The fact that the money is stock piled at the hands of the few is an obstruction against the formation of the demand in the public. The capitalist approach has no chance of solving this problem with its policies based on interest.
One program is not sufficient to get rid of deflation. A simulations implementation of a monetary, fiscal, accompanying foreign trade policies and actualization of the Social State approach is essential.
I here by declare with absolute clarity that counties may not be exempt from this illness unless they abandon the capitalist approach and implement the NEM.
It is evident that human beings don't have a problem of meeting their limited needs. The problem with the economy is the lack of projects financed by the surplus that would benefit the whole community.
If we accept that the resources are unlimited, the real question in the NEM is to evaluate these resources and to make them benefit all the classes of the society equally.
According to our thesis, the one to actualize this is the man with sense of responsibility and a feeling of giving an account for his acts.
The NEM doesn't evaluate only one aspect of the problem but handles the problem as a whole and resolves every aspect one by one. This is what makes it unique as an economical model, and the most comprehensive model ever compared to other economical models.
According to our thesis all the problems of the economy are linked together. And in order to resolve a question all the other issues related has to be resolved. This "Lumpsum Solution Model" introduced only by the NEM is the only way out for the world economies.
Let us start introducing our solutions by the NEM's "Definition of Money".
According to capitalist view money is merely a tool for exchange and saving. This view denies the fact that money is a driving force and a counterpart of labor and production. In order to understand what money really is, its functions have to be examined.
According to the NEM money has 4 fundamental properties.
1. MONEY AS A DRIVING FORCE:
In the National Economy Model, money is tool that triggers the labor in producing goods and services.
That is to say, it is not "neutral" (ineffective) as other schools of economy claim. On the contrary, it is an "operator" which assists the intentions of production and consumption to emerge. This property of money has been introduced to economy literature by the National Economy Model.
2. AS A COUNTERPART OF LABOR AND PRODUCTION
In practice, basic needs such as food, clothes, shelter, safety, and health might not be met without money. Furthermore it wouldn't be possible to activate labor to utilize natural resources without it.
Money is equivalent to the goods and services produced by the labor it has activated. Money that starts up the production might not correspond to a real asset. Money has the ability to form an equivalent or even higher value of its own through production. So the cost of money would be much less than the value of the goods and services produced trough the activation of the production factors.
This property of money is also a unique property attributed by the National Economy Model.
Same as the currency flow in the market, the money that triggers the labor that will activate the factors of production is also blank in the NEM. The money having no initial value by its own, gains values with respect to the goods and services production it induces.
The money that comes into play as a counterpart of labor and production puts the idle manpower into action. For instance construction materials lying in the mountains might be transformed into roads for the benefit of man. By doing so, both the manpower gets into action and roads are built as an economical entity.
3. MONEY AS A MEANS OF EXCHANGE
Any kind of commodity or service in the market might be bought by paying money. This is the exchange property of money. It is essential that sufficient amount of money is circulation for exchange to occur properly.
In liberal economies the money in circulation for exchange has a cost. The costly money causes a reduction in production, and also shrinkage in demand.
The liberal approach's fundamental method of drawing money away from the market through interest obstructs the healthy exchange environment. Consequently, the public loses its ability to consume and even the most basic needs could not be met through exchange.
The fact that the growing world population is not able to consume is not because of the insufficient amount of production, but because of the deprecation of money for the people to make that spending.
In NEM the money in circulation for exchange is costless. For this reason money may flow in the market freely and benefit the real economy. The NEM that ensures the exchange to happen widely stipulates that demand & supply reaches a point of equilibrium for the exchange of goods and services at the actual values.
The balance in NEM: The balance is obtained by the mathematical correction of demand and supply together/separately by emission. This approach is also the formula for sustainable growth that will be mentioned below.
4. MONEY AS A MEANS OF SAVING
In liberal economies, the saving of money aims to gain money form interest. The functions attributed to money by liberal approach causes:
a) The withdrawal of money from production and out of the real economy,
b) Money to become monopolized in the hands of a few,
c) The domination of global powers who store the money to rule the goods and services produced all over the world,
d) The increase of production costs,
e) The shrinkage of demand,
f) The decline in workman salaries and productivity.
In NEM the circulation of money in the market is costless. Therefore money is saved in order to;
a) produce goods and services,
b) meet daily consumption needs,
c) meet future need.
e.g. money is saved for the times of a funeral, wedding, hajj, natural disaster and illness.
The function attributed to money as a means of saving causes;
1) the free circulation of money,
2) the increase in production and demand,
3) the improvement of distribution of wealth.
The incorrect monetary policies employed until now has not only prevented the individuals ability to consume at the desired amount but also made it impossible to utilize the resources properly.
In our model, the today's fast growing economies' problem of ENDING RECESSION AND OBTAINING SUSTAINABLE GROWTH, and the seemingly impossible problem of UNEMPLOYMENT are both resolved.
The solution is a national mobilization in production, supported by a balance in consumption that is a result of state-public partnerships financed by emission in the form of credits without interest that evaluates the national resources in a Social State approach.
The NEM resolves the INFLATION problem by reducing costs of production by government-financed projects, a tax-free, an interest-free economy, and the strict state control over arbitrarily pricing.
In this respect, the NEM resolves all the problems such as; THE BALANCE IN THE DISTRIBUTION OF WEATH, THE ACHIVEMENT OF SUSTAINABLE GROWTH, AND THE ACHIEVEMENT OF FULL EMPLOYEMENT, which the Capitalist system left unsolved and accepted as unavoidable as seen in the current economical crisis.
In our thesis another crucial task of the state is to make all the national resources which actually belong to the people to benefit the people. In that way, the resources would be fully utilized and the resources would cause a mobilization of productions as they were used in production in the most beneficial way.
For instance, the oil reserve located in any part of the country belongs to the whole country. And this mine should be operated by the government to benefit all of the people. This model is a state-public partnership. The people should hold some of the shares of the mining company and the rest of the shares belonging to the state should be used in public expenditure.
The partnership of the people to these facilities would be possible by the interest-free credits given to the ordinary people through an increase in emission.
This issue is especially important for Turkey. This is because we have mineral resources of worth nearly 3 quadrillion USD and with new legislations our national treasures are handed over to foreign companies nearly for free. As a consequence, Turkey is transformed into "a beggar sitting on treasure" and borrows debts from the same foreigners with high interest rates. This is nothing but buying back our money with more money.
According to the NEM, we should start a "complete production mobilization". The KOBIs and tradesman would be supported by interest-free credits, the farmers would be supported by credits based on their yearly harvest yield before they plant the crop, the transporters, and all the drivers would be supported by long term interest-free credits to buy new vehicles, and the industrialists would be supported by long-term, interest-free, project based credits. By this way both the production and consumption would be encouraged.
According to our model, the state's support for the people is an economical rule.
Another project that would boost up production is the support of the state to finance its citizens with interest-free credits for investment and production purposes. In this way both the production would increase and costs would be reduced. The equal conditions of opportunity would be obtained for all citizens. These credits given on project basis should be monitored at every stage and the project owner should be informed of the progress and the process should be secured with necessary legal measures and support.
On the other hand the state also has the duty to market the products of its people both as acting as a Social State and also by implementing necessary monetary policies. The marketing of the products is more important that the granting of credits to the producers. It is because; if the producer can't find market for his products, he is doomed to ruin his business. In other words, the state should be the buyer in the market and support certain sectors, especially strategically industries by public expenditures.
The state also has to be key player in high technology and high capital requiring sectors.
"The Mobilization for Production and Lumpsum Growth" is an important project of the NEM. The state has to implement this move and work on necessary fields to achieve sustainable growth. This intervention is critical since our thesis disproves the claims by the Capitalist view that the market would eventually reach equilibrium in reaction to outside influences.
As mentioned above, in growing economies there exists a gap between production and consumption. If this gap is not eliminated by increasing emission, it is impossible for the economy to stay stable in time.
According to the NEM, this gap formed as a consequence of the nature of the economy may only be eliminated by the state intervention.
It is essential for the market that the state fills this gap by increasing emission using its senyoraj right.
At the same time, the state has to offer its producers the chance to compete in foreign markets by cost and price advantages made possible by emission.
Along with all these production supports, the state has to implement all kinds of anti-damping and customs fee arrangement in order to protect its people.
In the NEM the TAX issue is also handled in a distinct way. In the Capitalist view the only income of the state is tax. On the contrary, our model classifies the state incomes into three groups.
First is the tax income.
Second is the income of the state from the state-public enterprises that run the national resources. It is worth remembering again the value of our unexploited mineral resources is nearly 3 quadrillion USD.
Considering that our annual expenditure is roughly 50 billion USD, the money gained by the exploitation of our mineral resources would be sufficient to feed the nation forever. But today we are forced to beg for foreign debts as a result of foreign backed-up, incorrect policies.
It shouldn't be forgotten that our present situation as a "beggar sitting on a treasure" is to be blamed on all of the past governments which we have supported by our own votes and brought to power.
The third income of the state is the senyoraj income of the state formed by the growing economy.
Our thesis has underlined that the state should be "the giving hand not the taking hand". In today's Capitalist economies the state collects the taxes from the people, and returns a small part of it as public services, but most of the part goes to certain capital groups by the means of interest. On the contrary, in the NEM the state returns all or even more than it collects back to its people as services.
Our understanding of tax is different from the accustomed view and our tax is a "tax that grows the economy".
But, is it possible to have a "tax that grows the economy"?
As you know the Liberal view aims to shrink the state. What is aimed is to shrink the state, to reduce public expenditure and form a state that serves the public less. On the other hand it aims to increase the tax collection.
In countries where this system is applied, trillion dollars of the tax incomes of the state is transferred to global monetary groups as a back payment for the high interest debts the country borrowed.
If we look closely the Liberal views, as seen also in our country, insists on projects that don't pay the debts but cause them to increase even more. They force governments to implement programs called "sustainable debts" programs which are in fact "continuously borrow debts" programs. All the work done is aimed to secure the money of the ones who sell money to the country. Unfortunately, no one cares about the people of the country.
In the NEM, the first policy would be to implement a "costless money model" so that there won't be any interest expenditure in the budget. So the state returns all or even more than it collects back to its people as services. Our model introduces two more incomes to the state other than the tax incomes; the senyoraj income and the income from the natural resources facilities.
As known, the tax in Capitalist system not only reduces consumption but also lowers production and increases cost of production.
Let us first look at how the tax rates effect the consumption and who should be the ones to pay tax.
As an example let us assume that we collect 1000 units of tax. If we collect this tax from the lower income people this would reflect to the consumption as a 1000 unit reduction. But if we collect this tax from the upper income group, this would have a minimal, "zero" effect on the consumption.
In other words as the income of the individuals increases the effect of taxation on consumption is reduced. Because of this, collection of taxes from the lower income people does nothing but damage to the economy.
So what has to be done is to collect taxes from the rich. This specific income level might change from country to country or time to time, but we specify that under current conditions in our country, the ones having an annual income less than 100.000 YTL should be exempt from any taxes.
Not taking taxes from the lower income group would not decrease the tax income of the state, just the opposite it would increase the income. In addition, the lower income groups supported by the social policies of the state, would increase consumption and in turn cause an increase in production. In that way, the tax would act as a lever in elevating the economy.
In conclusion, the state not taxing the lower income group results in an increase of the total tax income.
This also eliminates the unbalance in the distribution of wealth.
If we give an example for this issue, for instance if we assume that a man has an annual income of 20.000 YTL and the tax he has to pay is 8.000 YTL. If the state doesn't take that 8.000 YTL as tax, the same amount will be spent as consumption and exchange from one hand to another in the market.
Considering Turkey's conditions today, we might assume that the money changes 15 hands in one year. So, the total amount of consumption in the market would be 120.000 YTL (15x 8.000 YTL) when the money was not taken away as tax. Following the increase in consumption, the production would increase and this production increase would generate a tax amount maybe 4 times greater than the initial 8.000 YTL.
We wouldn't get the same results if we were not to take the tax from the higher income group, since most of the money would be saved and there would be little influence on the consumption.
After explaining the relation between income level and tax, let us now look at tax influence on investment expenditures...Nowadays, taxes deprive the small tradesman of the capital he needs to perform small investments. On the contrary, if taxes were not taken from this group they would have the ability to make small investments.
The capital needed by the larger cooperation and investors would be financed by the state with zero interest loans according to the NEM. The small businesses would also have the right to benefit from these credits given on project basis.
The NEM also states that indirect taxes should be removed. Or else, these indirect taxes are applied regardless of the income level and cause great Social Injustice.
The incorrect tax policies applied today not only increase the unbalance in the distribution of wealth but also decrease the tax income of the state.
The collected taxes also have an effect on increasing inflation. High tax rates results in an increase in the production costs. In many countries, especially Turkey the inflation present should be described as "cost induced inflation".
It is merely a dream to hope that the inflation would go down without lowering the cost of production.
The distribution of wealth would be balanced by the NEM which proposes that the lower income group (less than 100.000 YTL annual income) would be exempt from taxes, employment would be exempt from taxes, and there won't be any indirect taxes.
Also according to the NEM, the increased consumption would increase production and in turn solve unemployment problem.
As a result the state would collect much more tax from her exponentially growing economy.
It is for these reasons the tax is a tool for economic growth in the NEM.
In Capitalist view, as the people were crushed under unjust taxes, the emerging decrease in demand and loss of currency in the market are not accounted for.
But the NEM proposes a method where the state increases emission and uses senyoraj income to resolve the question.
In a country, the Gross National Product is described as "the money equivalent of the total annual product of commodities and services produced". And it is a must that a portion of this money equivalent of these commodities and services be always present in the market for the survival of the economy.
For example; Let us assume we plant 1 bag of corn and harvest 10 bags of corn. If the property of money of being a counterparty of labor and production is not utilized this surplus of 9 bags of corn causes a reduction of demand in the market. The money that has to be in the market has to be the counterpart of these 9 bags of corn.
Emission is the amount of currency equivalent to this production and services.
This amount should be equivalent to the EMMISION as the amount of currency introduced by the central bank, but in Capitalist system it is transferred to the market by different means. In practice, the "SENYORAJ Income" of the state gained by emission is taken away and in reality by giving foreign loans, the "sovereignty" of the states is taken away.
As a necessity of the Capitalist system the ratio needed for the system are gathered from the loans with interest rate to the less developed and developing countries .
We are seeing an example of this horable trick. Nations turning the Center Bank independent from the government; the senyorage income right of the governments over Center Bank is forbidenned.
In developing countries's instead of senyorage income the developed countries' Center Bank Money is loaned with an interest rate. At this case the countries who get the loaned money are obliged to pay interest to the global forces. And they also transfer their senyorage incomes.
As a result countries, as in Turkey case are pushed into a very big debt marsh.
Since years we are trying to take the attention of our public about these topics ; but now in Turkey and also all over the world names who are respected in their areas mentioning the same thing.
As a matter of fact T.C Center Bank former President Mr Yaman Toruner mentioned in his article in Milliyet that; Developing Countries are not allowed to use senyorage income right, instead of this developed countries use senyorage income right on behalf of these developing countries with emissioning their hard currency. By this emission they are getting tax from these developing countries.
Yaman Toruner says "Center Banks are very important invention like a fire and whell. By means of Center Banks governments print money and a get a senyorage income same level of the emission. This means that governments take a tax with the printed money in Center Banks. With this point of wiev Center Banks are part of the countries and they can not be independent from the countries.
With another way of word the Center Bank's being independent means that they are not belong to that country but they are belonged to Capilatist Systems's Directors or Managers. If a country is already ready to obey the Capitalist System Managers requests than with an approve this country Center Banks will be independent.
Real senyorage incomes are gathered in Developed Countries' economies. To control this income of developed countries; developing countries Center Banks have to be independent and indepence has to be a principle in operation. olmas--, ba----ms--zl------n prensip edinilmesi, We mean that countries's benefits has to be protected.rather than the other countries's benefits. Developed countries's Center Banks mint their hard currency which are accepted real exchange tools. The publics of the developing countries has to pay, use an investment tool, and use as a loan tool the the amount of the hard currencies which has no corresponding.
Independent Central Banks of developing countries provide hard currency money in their reserve. The Central Banks of Countries which can mint hard currency mint many times demand from outside of their country much more than the demand in their country.
Developed Economies mint money with an amount of money which is demand from other coutries. And they collect senyorage income from this money. In an another word developed countries , collect tax from developing coutries over their Central Bank.
International Credit Associations advise us ; "Instead of increasing the volume of emission and producing, loan the money by an interest rate and make the production with this foreign money."
The authorities who says; "Don't mint money there will be inflation" defence their ideas with a hypothysis that "If the Central Bank mints money this will create inflation; but if we loan money with interest rate and finance the production with this loaned money there will be no inflation and because of that our country can develop with this way" But these ideas and the proofs to defend these ideas are nonsense.
In the countries affected from IMF wise foundations investments waits for foreigners to do. The idea that "Foreigners will come , they will invest and we will employed there" mentality is dominating in our country Turkey. But we also mentioned in the beginning only mine reserves of this country is about 3 katrillion dollars.
What has to be done is not waiting with opening our hands like beggars, to operate these sources with government-public solidarity.
Existing of foreign currency in a country ; means that it will find a correspondance with public labour and production. This is a transfer of wealth and labour to foreign countries and global investors . Unfortunately from many years Turkish economy is living the same consequence over the years.
Putting reserve foreign currency in a Central Bank other the domestic money or putting into the circulation means that the country which puts money and circulating it are finasing other countries.
Today our country and far east countries Cental Banks have a big amount of US dollars as a reserve. As an example Japanese Central Bank has a US reseve about 800 billion USD. This means that Japanese Public made a 800 billion USD amount production and US mint money absolutely no cost(paper and printing colors) they transfered this production and the labour to itself.
In turkey condition is worse. Because we are giving permission of foreign currency not only in our Central Bank and also in the circulation in national market.
It means that we can not use our senyorage income right with the money in the emission. And more to that we are using foreign papers which Fofeign Central Banks mint and send to us. And we transfer senyorage income right to foreign economies.
Liberal wiev mentiones about "The Circulation of Money freely" what they are mentioning about is the money in the hands of global investment. The background of this idea is " to enter the countries economy easily and to exploit that country" But the National Economy Model mentiones about money has to reach everbody when we say "Free Circulation of National Money
Because if there an opposite wiev money will be collected in some determined hands; market control will be done by a small group of people. This is the transfer of income with a interest to the same people..
Speculative purpose movement of the money give the same result. All of these conditions , causes unstabilitiy in income distrubition and also economy will be become narrower. >
The other barrier on the senyorage income right of the government is the recorded money that private banks produced in the money system. Private banks produce recorded money by the help of the deposit money they collected. Banks send this money to the circulation as a recorded money.
Issuing of recorded money of private banks prevent the governments to make strong money molicy. So the government loose the guide to the markets and trnasfer this right to the banks.
If the money which has a demand in the markets taken from the recorded mnoney of the banks instead of Central Bank money mint gives the senyorage income right to these banks instead of the government. Recorded money is the compensation of public production and labour ; banks transfer the public and government incomes to theriselves.
As a conclusion to our explanations we say that the only way of saving the countries from loaning swamp is to put the emission in the money system instead of expensive foreign money.
In National Economy Model increasing the emmision volume with determined amounts will increase the senyorage income is an obligation for governments. Otherwise because of there will not be enough consumption and economy will not come to equilibrium.
The idea who are against senyorage income seems to be "Increasing amount of money will increases the prices wiev"
But the people who put this false claim forward are supporting foreign credits which are taken with an interest and other side they also supported the recorded money system of banks. The statements of T.C Central Bank President Mr Serdengecti are attracting the attention.
Serdengecti says " The ratio of the emission rate to the national income is low. Central Bank is not minting money it has to do for a while. The aim of this is to hold the interest rates high. If Central Bank stop to serve the people who are winning from money, and if it mints money interest rates will go lower , production and investment will be high, because of production increase inflation rate will decrease." Hurriyet Newspaper 17.01.2005.
The people who are against the senyorage income want to sell money and want to get interest from this sale. If governments increrase their emissiion volume and incres their senyorage inome; tahn the global usurers and domestic Subcontractor will loose a very big income door.
National Economy Model, takes the Senyorage Income both an economic rule and also it formulates waht factors affect the income.
In our thysis ; government will not loan money it will use its senyorage right and increase the volume of the emission. Th--s means that governmnet will mint the money that will be used domestically. This senyorage income will go social expense. Governent will give salary to housewifes, credits to farmers and and the people living in rural areas. These activities will do;
a) Productin will triggewred.,
b)Consumer will begin to be supporrted.
Seniorage income will be the the main supporter of the Consumer Side in Social Government Project
And than labours, officials, villagers, farmers it means all parts of the consumer side consume capability will be increased. In the opposite of that manufacturers will produce more and contious demand volume will increase the manufacturer's production level. These two elements will work like suction and force pump. The desired balance will be caught
The governments which meets the labour and production with its own money can make public expensen without loaning.
If the money which doesn't meet the labour and the production than there will be lack of money. Markets stagnate. AtEmek ve üretimin kar----l------ elde edilen kâr mukabili paran--n at th--s stage seniorage will be the source of income.
The other topic in our economy model is "At some times seniorage income can be put in the economy without thinking that the production and labour. "
The seniorage income which has to be put into practice compesation to labour and the production generally , in some cases can be used without looking for and compensation like labour and production. Than the economy grows again.
As an example; if there is no financial fonds for building main roads, all labours and the machinery belongs to yourself than you can use seniorage income compensating this issue and economy grows.
The same method is applied for underground minerals. The similar example is for agriculture.
You don't need to pay to the farmers money in your hand. You can increase the volume of emission with a seniorage income in agriculture sector because with the compensation of labour and production you can support the production.
We mean that in our thysis we don't need to see the profit of the labour and the production for using emission.
If the profit with labour and the production seen the main of the emission increase is to protect against conditional inflation. If there is any inflation risk government's insist on price controls can prevent inflation risk.
As seen We can not compare the advantages of seniorage income in National Economy Model with the loaning money with interest.
Up to this stage we mentioned about to save the economy from inflation by reducing the cost items with a government support, new wiev to the taxation, increasing the emission volume, and making the interest rates 0 by using seniorage income right.
We state at this stage that interest break the equilibrium point of the economy, and it brings the capital to certain hands and it prevents social justice.
The main source of the big economic problems like recession, stagfilation, inflation and unemployment is also interest.
It is impossible to meet the "equilibrium of the market" is impossible with interest.
The economies which money is the "interest slavery" position money can n
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| 5. | NATIONAL ECONOMIC MODEL(Prof.Dr.Haydar BAS - Ankara, Turkey Sep 11, 2007 |
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